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Recent developments

In this section you will find:

  • previous issues of Class Action, and
  • information on newly announced class actions, current proceedings and recent settlements.

Previous issues of Class Action

Issue 1 - Q3 2010

  • Multiplex class action settled
  • Bank fees targeted
  • Crash landing - collapse of OFT’s criminal cartel case against airline executives
  • Border protection for Australian issuers
  • All class: new requirements for representative actions

Issue 2 - Q4 2010

  • Jurisdictions compete for part of the (class) action
  • Managed Investment Schemes - a future class action target?
  • Playing the man - reading through the company to sue directors

Issue 3 - Q1 2011

  • Directors respond to class action risk: Directions Report 2011
  • Misleading investors about the risks of financial products - risks for companies and their staff
  • Penalties for anti-competitive conduct: 2010 in review
  • Rate variation rights in variable interest loans - the first test case
  • Class actions in Hong Kong - recent developments

Prospective class actions

Current class actions

Recent settlements and judgments

Prospective class actions

  • Sony
  • Solar Bonus Scheme
  • Leighton Holdings
  • AECOM traffic modelling forecaster
  • Equititrust Limited
  • Downer EDI
  • ABC Learning
  • Vodafone
  • CWA Global Markets
  • Elders
  • Willmott Forests

Sony

In May 2010, it was reported that entertainment company Sony and Sony Online Entertainment is facing class actions in the US and Canada.  These actions were brought on the basis of three reported thefts of customer data (which included Australian customer data), being:

  • the hacking of 77 million Playstation customer accounts, which included names, addresses, user names, passwords and possibly credit card details; 
  • the hacking of credit and debit card details of around 24.6 million Sony Online Entertainment accounts; and
  • the theft of about 2500 names and partial addresses of people who had entered a 2001 product sweepstake.

The US and Canadian proceedings claim privacy violations, negligent data security, breach of warranty and a failure to properly inform customers of the breaches.  To date, no claims have been reported in Australia.

Solar Bonus Scheme

The Solar Energy Industries Association (SEIA) has hired Piper Alderman to investigate the legality of the NSW government’s retrospective legislation and peremptory closure of the Solar Bonus Scheme.  Its proposed class action would be launched on behalf of subscribers and solar panel suppliers (which have about $200 million in their inventory).  Sydney law firm Neville and Hourn is also reportedly preparing a class action on behalf of up to 1000 complainants, including installers and retirees.

The scheme was suspended on 28 April 2011 and is no longer open to new applicants.  The 40,000 people who are yet to be connected to the grid, or had applications pending before the scheme was suspended, would only receive a tariff of either a $0.40 or $0.20 per kilowatt hour. 

Similarly, for the 120,000 existing subscribers to the Scheme, the NSW government had planned to introduce retrospective legislation to reduce the current tariff they are paid for generating electricity back into the grid from their solar panels from $0.60 to $0.40 per kilowatt hour.  The NSW government has since abandoned its initial proposal to cut tariffs for existing subscribers of the scheme through retrospective legislation.

Leighton Holdings

In April 2011, it was reported that construction group Leighton Holdings Ltd may face a potential class action as a result of its unexpected profit downgrades and write downs in the last six months. 

Just six weeks after giving guidance on 24 February 2011 that it would deliver a full-year net profit of $480 million, Leighton disclosed almost $1 billion in impairments, a $757 million raising, and a $427 million loss, relating to cost overruns at major construction projects such as Airport Link and the Victorian desalination plant as well as slow payments to its Al Habtoor Middle East joint venture.

Litigation funder IMF is examining the feasibility of a shareholder class action, while Maurice Blackburn and Slater & Gordon are keeping watching briefs on Leighton.  Any potential class action will concern itself with what Leighton knew, whether it was disclosed to shareholders in an accurate and timely way and, if not, whether shareholders lost money as a result, as well as what Leighton’s parent company Hochtief knew of the recent write downs and profit downgrade.

AECOM traffic modelling forecaster

The traffic modelling forecaster for the now collapsed RiverCity Motorways, AECOM, is facing a $700 million class action, announced in April 2011 and to be funded by IMF. 

It is alleged that AECOM’s statements in its 2006 product disclosure statement in relation to predicted traffic numbers for the Clem7 Tunnel were misleading and deceptive, and failed to provide investors with full information about another set of traffic figures AECOM had compiled on the project 18 months earlier.  AECOM’s PDS tipped the average daily traffic through the tunnel would be 90,000 per day, but did not mention that a report 18 months prior had forecast only 57,000 a day.  Both are a mismatch to today’s actual figures of 24,000 a day.

Group members will include all shareholders who bought shares in the float of RiverCity in 2006.

Equititrust Limited

Piper Alderman is reported to have received financial backing from a litigation funder to investigate the merits of a unitholder class action against Equititrust Limited for contraventions of the Corporations Act.   The claim is based to be brought by investors in the troubled mortgage fund (the responsible entity of the Equititrust Income Fund) following the suspension of income distributions in early April 2011

Currently, EIF unitholders are awaiting the outcome of a review of the $260 million worth of assets in the fund, which is expected to deliver more losses. The announcement could provide more fuel for a potential class action suite on behalf of EIF's investors. 

Downer EDI

On 10 February 2011, litigation funder IMF announced that it would fund a class action by current and former shareholders of Downer EDI Limited.  It alleges that the company engaged in misleading and deceptive conduct, and breached its continuous disclosure obligations in relation to a write down.  When the $190 million write down (which related to the Waratah train project in NSW) was announced on 1 June 2010, Downer EDI’s share price fell by more than 27 per cent in one day.  Media have reported that the class action could potentially be worth as much as $100 million.

ABC Learning

In January 2011, Maurice Blackburn filed proceedings in the Federal Court on behalf of former shareholders of ABC Learning, seeking orders that the company’s liquidator disclose details of insurance policies held by ABC Learning.  If there is adequate insurance, a class action could follow.  Maurice Blackburn believe that the 100 applicants who have joined the action have collective claims worth as much as $100 million, however they acknowledge that any insurance is unlikely to extend that far.

Vodafone

In late 2010, law firm Piper Alderman announced it was investigating a potential class action suit by customers of Vodafone for problems with its network performance.  They have also said they are considering whether the case could include reported breaches of privacy by Vodafone dealers, and network problems with the carrier 3 which is also owned by Vodafone. In July 2011, it was reported that as many as 23,000 people have registered their interest in the class action and that Piper Alderman is in the process of securing funding.

CWA Global Markets

In September 2010, Slater & Gordon announced that it was investigating CWA Global Markets, a Sydney based derivatives and securities broking company, after being approached by former clients of the company. According to media reports, the former clients are unhappy with the adequacy of CWA Global Markets’ advice and the level of disclosure, in particular in relation to the fees they charged on warrants. Slater & Gordon said that they would be investigating “whether CWA met its legal obligations to its retail customers, particularly, whether its advice was appropriate given the circumstances of customers”. In April 2010, the Commonwealth Government announced new rules preventing financial advisors from receiving commissions on the products they sell.

Elders

In June 2010, Slater & Gordon announced that it was investigating Elders for a potential class action in relation to market disclosure. Elders’ share price dropped over 45% in one day following the release of a profit downgrade on 22 June 2010. ASIC is reportedly also making enquiries of Elders in relation to the profit downgrade and its continuous disclosure obligations. Elders CEO, Malcolm Jackman, has denied that the company misled investors. Comprehensive Legal Funding LLC is funding the Slater & Gordon investigation.

Willmott Forests

In October 2010, it was reported that Macpherson + Kelley was managing a potential class action being considered by investors in the Willmott Forests Managed Investment Scheme. Macpherson + Kelley said that they would pursue both the responsible entity of the scheme and its directors. The action will reportedly be funded by the grower/investors themselves rather than by a litigation funder.

Current class actions

  • Gunns
  • Hip implants
  • Nufarm
  • Sigma Pharmaceuticals
  • Lehman Brothers
  • Australian Retail Banks
  • Clubs’ plasma TV leasing
  • Bendigo and Adelaide Bank/ Great Southern
  • Commonwealth Bank (Storm)
  • Singapore Power and the 2009 Victorian bushfires
  • Octaviar and KPMG
  • Centro and PricewaterhouseCoopers
  • Airline industry

Gunns

On 20 April 2011, Maurice Blackburn filed a class action against woodchip company Gunns Ltd in the Federal Court.  The claim alleges that Gunns failed to disclose to its shareholders and the market facts relating to the downturn in the woodchip industry, which materially affected its share price during the first half of 2010.  In particular, on 22 February 2010 Gunns informed shareholders that its profit for the first half of 2010 was down by over $30 million, or 99% lower, than the profit reported for the corresponding period in 2009.  Shareholders claim that the market should have been informed of this downturn on 31 August 2009. 

The class action is funded by IMF and is brought on behalf of shareholders who acquired an interest in Gunns shares during the period 31 August 2009 and 19 February 2010.

Hip Implants

On 28 February 2011, Maurice Blackburn commenced a class action in the Federal Court of Australia against DePuy International Ltd, a UK manufacturer of hip implants, and its Australian distributor Johnson & Johnson Medical Pty Limited.  It is alleged that the manufacturer and distributor were negligent and that the implants were not fit for their purpose and were not of merchantable quality.

It is alleged that more than 5,000 Australians had faulty prosthetic hips implanted which lasted only 5 years (instead of the 15 years advertised).  The class action will seek compensation for personal injuries caused by pain and suffering, economic loss and carer costs.

Nufarm

Class actions against Nufarm were filed in the Federal Court by Slater & Gordon on 14 January 2011 and by Maurice Blackburn on 24 December 2010.

Following a profit downgrade in July 2010, Nufarm’s share price fell almost 30%.  The applicants allege that Nufarm engaged in misleading conduct in relation to its full year result for the 2009/2010 financial year, and breached continuous disclosure obligations.  Slater & Gordon have previously stated that its class action had received strong support from institutional investors.

Following the directions hearing on February 15, Slater & Gordon are seeking to examine documents held by Nufarm as part of the discovery process.  These class actions are “open classes”, allowing all shareholders affected by the conduct to benefit, regardless of whether they registered to participate in the class action.

Sigma Pharmaceuticals

On 29 October 2010, Slater & Gordon announced it had filed a class action against Sigma Pharmaceuticals in the Federal Court, funded by Comprehensive Legal Funding LLC.  Following a review of the initial statement of claim, an amended statement of claim was filed on 18 April 2011.   

The class action alleges that Sigma engaged in misleading or deceptive conduct in relation to profit guidance provided in September 2009, and breached its continuous disclosure obligations by failing to inform the market of a significant deterioration in market share. They claim that the class action is estimated to be worth up to $100 million.

The class action covers investors who had executed litigation funding agreements with Comprehensive Legal Funding LLC prior to commencing proceedings and who purchased Sigma shares between 7 September 2009 and 25 February 2010.

Lehman Brothers

In March 2010, the High Court upheld the successful action by local councils to set aside the deed of company arrangement between Lehman Brothers Australia Limited’s administrators and its creditors.  Under that deed creditors, such as the local councils, would have received between 2.4c and 10c in the dollar. 

That decision opened the way for a class action to be brought by councils, churches and charities who bought $1.2 billion worth of financial products, such as Collateralised Debt Obligations (CDOs) from Lehman.  The group members were represented by law firm, Piper Alderman.  The setting aside of the deed of company arrangement also allowed the councils and others to sue third parties including Lehman Brothers in the US, which was precluded under the deed. 

The hearing of the class action before Justice Rares of the Federal Court of Australia ended on 7 June 2011.

In a New York court case, Perpetual Trustees has settled its claim with Lehman Brothers over similar CDOs.  While the liquidator of Lehman Brothers Australia attempted to seek details of the agreement from Perpetual Trustees for the purposes of determining the value of notes in the class action proceedings, Justice Rares set aside the liquidator’s subpoena.

Australian Retail Banks - bank fees

In September 2010, Maurice Blackburn commenced an IMF funded class action in the Federal Court against the Australia and New Zealand Banking Group Ltd (ANZ Bank).  The class action alleges that exception fees charged by the bank, for example over limit fees, constitute a penalty because they are out of proportion to the actual cost to the bank of the customer’s breach of contract. 

In April 2011, Justice Gordon delivered judgment for the Applicants on a Notice of Motion brought by the Applicants.  Specifically, Justice Gordon ordered that there be an initial hearing to determine separate questions in relation to the doctrine of penalties and its application to the particular fees charged by ANZ Bank.  The initial hearing is set down for October 2011.  Justice Gordon also struck out a paragraph of ANZ Bank’s defence, which denied that the fees charged by ANZ Bank were out of all proportion to the costs it incurred, on the basis that ANZ Bank did not have any factual basis for that pleading.

Maurice Blackburn and IMF have indicated that the ANZ action is the first of multiple bank fee class actions, and other potential defendants could include Bank of Queensland, Bank SA, BankWest, Bendigo Bank, CitiBank, Commonwealth Bank, HSBC, National Australia Bank, St George, Suncorp and Westpac.

Clubs plasma TV leasing

In September 2010, Slater & Gordon announced that 19 registered clubs had commenced two class actions in relation to the leasing of video screen plasma equipment against the vendors, Total Concepts Product Pty Ltd (now in liquidation), and two leasing companies, Rentworks Limited (now Alleasing Finance Australia Limited, “Alleasing”) and Capital Finance Australia Limited.  The clubs allege that they were given a commitment by the equipment vendors that advertising revenues would cover the leasing costs, but this did not occur.  Under an amended statement of claims the clubs allege that the vendors engaged in misleading and deceptive conduct under the Trade Practices Act (“TPA”); and exclusive dealing in breach of the TPA. 

Bendigo and Adelaide Bank/Great Southern

In August and September 2010, two separate class actions were launched against Bendigo and Adelaide Bank, the Great Southern companies in liquidation, and several Great Southern directors, in connection with the collapse of the Great Southern group’s Managed Investment Scheme.

1. Macpherson + Kelley commenced an action in the Victorian Supreme Court in August, and DC Legal commenced an action in the Federal Court in Sydney in September.

After the initial pleading was struck out on 20 October 2010, a new statement of claim was filed and on 11 March 2011, the Victorian Supreme Court allowed the case to proceed on behalf of people who invested in Great Southern’s 2005 and 2006 plantation projects.  More than 2,000 investors have joined the class action.  It is alleged that the loans provided by Bendigo and Adelaide Bank Limited, Javelin Asset Management Pty Ltd and Great Southern Finance Pty Ltd are void or unenforceable because Great Southern misled investors by not disclosing the risks associated with managed investment schemes and the company’s poor financial performance.  The claim also seeks damages for amounts already paid to the defendants for loans made for entry into the agribusiness managed investment schemes.

Macpherson + Kelly now intend to file further class actions for clients who invested in various other Great Southern schemes between 2005 and 2009.

2. On 22 October 2010, the Federal Court made orders discontinuing the proceedings brought by DC Legal against Bendigo and Adelaide Bank. The Applicants were due to file a new application and claim against the remaining defendants (three former Great Southern Group directors) by late February 2011, with the matter returning to court for directions on 4 March 2011, however, additional time has now been sought. 

Slater & Gordon has also indicated that it is investigating a class action against Great Southern.

Commonwealth Bank (Storm)

On 1 July 2010, a class action against the Commonwealth Bank (CBA) was filed in the Federal Court by solicitors, Levitt Robinson.  The applicants allege that CBA and Storm Financial Limited had operated a managed investment scheme, which they failed to register in breach of the Corporations Act 2001 (Cth), and that CBA failed in its responsibility to contact Storm clients when margin loans provided by a CBA subsidiary (Colonial Geared Investments) fell into margin calls in September and October 2008.  This action comes in the wake of a settlement (involving a dispute resolution scheme) which was reached by Slater & Gordon, on behalf of its clients, and CBA.

On 24 November 2010, ASIC announced that it would bring civil penalty proceedings against Emmanuel and Julie Cassimatis as directors of Storm for contravening the Corporations Act.  In April 2011, the Federal Court in Sydney granted ASIC leave to proceed against Storm.  The Corporations Act requires anyone seeking to institute proceedings against a company in liquidation to receive the Court’s permission.

On 22 December 2010, ASIC announced it had commenced compensation proceedings:

  • in Brisbane against parties including the Commonwealth Bank of Australia (CBA), Bank of Queensland Limited and Macquarie Bank Limited (MBL) arising out of these entities' involvement in an alleged unregistered managed investment scheme operated by Storm.
  • in Sydney on behalf of two investors against BoQ, Senrac Pty Limited and MBL, based on breach of contract, unconscionable conduct and liability as a linked credit provider of Storm.

Applications by CBA, MBL and BoQ to dismiss the compensation proceedings the ACCC has brought against them will be heard on 8 July 2011.  MBL has foreshadowed that it will argue that the two investors in ASIC’s Sydney action are also represented in the Brisbane action and it is vexatious to have to defend two cases on the same issue.  They also said they would argue that ASIC’s Brisbane action should be struck out because it covers similar issues to the Levitt Robinson action which is already underway.

Singapore Power and the 2009 Victorian bushfires

Within 10 days of the Black Saturday bushfires on 7 February 2009, class action proceedings were commenced against Singapore Power International. 

It is alleged that the fire was started by a broken SPI Electricity powerline and that SPI Electricity was negligent in inspecting and maintaining the powerline and, in particular, that SPI Electricity failed to fit a protective device called a “vibration damper” on the powerline which contributed to it breaking.  Proceedings were initially commenced by Oldham Naidoo Lawyers, and Maurice Blackburn joined the conduct of the  proceedings in May 2009. 

SPI Electricity recently attempted to have the proceedings dismissed citing an abuse of process by Oldham Naidoo Lawyers.  Oldham Naidoo Lawyers had named a representative plaintiff, Leo Keane, without first obtaining his permission.  On 10 May 2011, the Victorian Supreme Court held that the solicitors’ conduct was a “patent and egregious abuse of process” which should be referred to the Legal Services Commissioner. However, the Court found that the proceedings should continue, since  a new plaintiff, Carol Matthews, had replaced Mr Keane as lead plaintiff in July 2010 and was ready, willing and able to prosecute the proceedings.

Maurice Blackburn, which now leads the class action, brought Oldham Naidoo Lawyers’ conduct to the court’s attention and was not involved in the abuse of process.  Recently, it has been reported that the Victorian Government is reluctant to allow the Supreme Court access to the submissions and findings of the Bushfires Royal Commission.

Octaviar and KPMG

In April 2007, a class action was commenced against Octaviar (formerly MFS Ltd), directors of MFS Investment Management Ltd and two partners of KPMG.  The applicants represent more than 10,000 unitholders in the Premium Income Fund (PIF), a previously unlisted managed investment scheme that was controlled by MFS Ltd.  According to press reports, the applicants allege, among other things, that unsecured loans were made in contravention of the fund’s constitution.  KPMG’s role in the proceedings arises from its role as auditor of the fund from 2003 to 2007, with the applicants alleging that KPMG had an obligation to ensure transactions were in accordance with the constitution and were in the investors’ best interests.

In May 2011, the plaintiffs’ motion to amend their statement of claim was refused.  In so doing, Justice Perram stated: “The unavoidable truth is that the applicants simply have no idea what has happened within this Fund apart from a conviction that something went wrong”.  Justice Perram observed that the only viable claim was in negligence against the auditor, but he refused to grant leave because it was not articulated.  The matter is next listed for hearing on 18 July 2011, at which time the Court will consider another application to amend the statement of claim.

Relatedly, in November 2009, ASIC commenced civil proceedings in the Supreme Court of Queensland against three subsidiary companies of the formerly listed MFS Ltd, as well as four former officers and one manager of MFS Investment Management relating to the use of funds of PIF.  The matter remains before the Court.

Centro and PricewaterhouseCoopers

Three class action proceedings were issued in the Federal Court in May 2008, alleging that two listed Centro entities (CNP and CER) failed to disclose material information to the market and engaged in misleading conduct in relation to their debt position between April 2007 and February 2008, including by incorrectly classifying debt in their 2007 accounts.  In May 2009, Centro issued cross-claims against PricewaterhouseCoopers, which were the Centro entities’ auditors in the period.  In late 2010, PwC was also joined to two of the proceedings as a respondent and two further proceedings were commenced against PwC and PricewaterhouseCoopers Securities (PwCS).  PwC and PwCS have now issued cross-claims against CNP, CER and certain of their directors and officers. 

The initial trial of all five proceedings is commence in March 2012.

Airline industry

There are currently two representative actions in the Federal Court involving the airline industry.

1. British Airways is defending a representative action commenced in January 2007 regarding the air cargo industry.  The Applicants (an importer of dental equipment and an exporter of seafood) allege that seven airlines, including Qantas, fixed the level of a fuel surcharge applied to air freight services to and from Australia, in contravention of the Trade Practices Act 1974 (Cth) (TPA).  After a number of strike out applications and the issue of a seventh form of pleadings the opt out notice has recently been published.  Potential group members have until 19 August 2011 to opt out.  The ACCC’s prosecution of nine airlines, some of whom are also respondents to the class action, is also continuing with the hearing set to commence in July 2012.

2. In 2006 a travel agent commenced a class action against British Airways and other airlines, including Qantas.  The travel agents allege that:

  • when calculating the amount of commission due to them for the sale of international passenger tickets, the airlines should have included the fuel surcharge component in the commissionable ticket price and that the failure to do so was a breach of contract, and
  • the airlines’ requirement that the fuel surcharge be described on airline tickets as a “tax, fee or charge,” was incorrect and therefore misleading or deceptive. 

Proceedings as against Qantas were settled in late May 2011, following an appeal to the Full Federal Court which found that there had been a breach of contract (the High Court refused special leave to appeal the decision). Distribution of the settlement fund of $2.1 million will follow.  Proceedings are continuing against the four remaining airlines.

Recent settlements and judgments

  • Amcor/Visy
  • OZ Minerals
  • Fincorp
  • Cranbourne gas leaks
  • Westpoint
  • 2003 Victorian bushfires
  • Pan Pharmaceuticals
  • Multiplex
  • AWB
  • Merck

Amcor/Visy

A class action proceeding was commenced by Maurice Blackburn against Amor in April 2006 on behalf of buyers of cardboard boxes, claiming loss resulting from alleged price-fixing arrangements between Amcor and Visy pursuant to the Trade Practices Act 1974 (Cwth).  Amcor filed a cross claim against Visy in July 2006.  See here for an Alert on the substance of the claim.

On the first day of the hearing on 9 March 2011, counsel for the Applicant informed the Court that the parties had commenced negotiations and hoped to be able to approach the Court with the terms of settlement within 48 hours.  On 10 March 2011, the Court was informed that settlement had been agreed and a deed signed, settling for a total of $95 million (including interest) - with Amcor to pay $63.3 million and Visy to pay $31.7 million. This figure represents the total compensation for group members and does not include legal costs (which have since been approved by the court in the sum of $25 Million). A more detailed Mallesons alert on this settlement, which was approved by the Court on 2 May 2011, is here.

OZ Minerals

On 10 May 2011, the parties in the class action commenced by Maurice Blackburn reached a settlement of $35.9 million (plus costs) with OZ Minerals.  On the same day, the parties in the Slater & Gordon class action negotiated a $19.2 million settlement, plus $1.8 million in costs.  On 1 July 2011, the Federal Court approved both the Slater & Gordon settlement and the Maurice Blackburn settlement.

The Maurice Blackburn proceedings against OZ Minerals were commenced in October 1999 on behalf of persons who purchased ordinary shares in OZ Minerals on the ASX between 21 August 2008 and 27 November 2008.  The applicants alleged that OZ Minerals breached its continuous disclosure obligations and engaged in misleading and deceptive conduct in respect of its debt levels, including a refinancing agreement that it entered in February 2008, the effect of which was to render all the liabilities that were the subject of the agreement current liabilities.  The applicants alleged that OZ Minerals did not tell the market by 21 August 2008 that it had US$560 million in debt due to be refinanced by November 2008 and that it instead released positive statements to the market concerning its balance sheet.

In August 2010, Slater & Gordon filed a separate class action against OZ Minerals in relation to the same alleged breach of continuous disclosure obligations in the same general time period as the Maurice Blackburn action.  In January 2011, it was reported that Slater & Gordon had signed up more than5,000 shareholders.

Fincorp

In March 2011, the Federal Court approved a $29 million settlement negotiated by Slater & Gordon on behalf of over 5,000 investors who incurred losses when Fincorp Investments collapsed in 2007.  The applicants had alleged that Bendigo Bank subsidiary Sandhurst Trustees, the appointed trustee of Fincorp, breached its duties as trustee for the investors under the Corporations Act.

Those eligible to share in the settlement invested in Fincorp from December 2004, nine months after Sandhurst was appointed trustee.  Provided investors held those notes until 23 March 2007, they will be eligible for six to 65 cents back in the dollar.

Cranbourne gas leaks

In May 2011, the Supreme Court of Victoria approved a $23.5 million settlement negotiated by Slater & Gordon on behalf of more than 750 Cranbourne property owners whose health and homes were affected by methane gas leaks from a nearby landfill.  The applicants alleged that the City of Casey and the Environment Protection Agency (EPA) had failed in their duties to manage the site safely.  As part of the settlement, the City of Casey will put forward $13.5 and the EPA $10 million.

Westpoint

In November 2007, ASIC launched 19 civil actions in order to recover funds for investors who lost money in the collapse of Westpoint in 2006.  These actions included proceedings against:

  • directors of Westpoint mezzanine companies;
  • KPMG, the former auditors of the Westpoint Group;
  • seven financial planners who recommended and sold Westpoint investments to their clients; and
  • State Trustees Limited, the trustee of an unsecured mezzanine note issued by Market Street Mezzanine Ltd.

A “global mediation” strategy was commenced in 2009 to attempt to resolve the claims, and on 29 May 2010 the fifth compensation settlement was reached

In 2010 KPMG launched a constitutional challenge to ASIC’s power to seek compensation on behalf of investors.  On 1 February 2011, the morning the High Court was due to hear the case, ASIC reached a settlement of ‘up to $67.5 million’ with KPMG and the former Westpoint directors, resolving the High Court and other cases. 

2003 Alpine bushfires

In May 2011, the Supreme Court dismissed a class action in relation to the 2003 Alpine bushfires.  The class action was lodged in 2008 by Slidders Lawyers, now Oldham Naidoo, naming a man called Dr Hersall Cohen as the lead plaintiff.  The lawsuit was against the State of Victoria, Parks Victoria and the Department of Natural Resources and Environment and claimed that the government and its agencies failed to adequately backburn and reduce forest-floor litter and this allowed bushfires to spread from the alpine state parks into private property, causing massive losses.

The lead plaintiff did not know his name was being used and successfully applied to have it removed from the proceedings in October 2010.  A subsequent lead plaintiff also withdrew, and no other person could be found to take on the role.  In such circumstances, Justice Forrest said it was “highly unlikely” a group member will come forward, and that the claim had become “seriously and unfairly burdensome, prejudicial and damaging” to the defendants.  Furthermore, Justice Forrest found that the use of Dr Cohen’s name was a patent abuse of process. The claim was dismissed as it was not in the interests of justice to let it continue unauthorised and without any real prospect of a lead plaintiff.

Pan Pharmaceuticals

In November 2010, it was announced that the Federal Government and the Therapeutic Goods Administration (“TGA”) had reached a confidential settlement of the class action brought by 165 of Pan Pharmaceutical’s former customers, creditors and distributors, led by PharmaCare.  In March 2011, it was reported that the final settlement figure of the Pan class action was $67.5 million.  The Federal Court approved the settlement on 25 March 2011. 

The class action followed the $55 million settlement the Federal Government reached with the founder of Pan Pharmaceuticals, Jim Selim, in 2008.  Both actions arose from events in 2003, when Pan Pharmaceutical collapsed after the TGA suspended its manufacturing licence and ordered a mass recall of its products.

Multiplex

Multiplex  defended class action proceedings that were brought by P Dawson Nominees Pty Ltd against Multiplex in the Federal Court in November 2006.  Separate class action proceedings were later commenced by Frederick Hart in December 2008, which were later consolidated with the Dawson Nominees proceedings and run as a single action.  The proceedings were led by Maurice Blackburn, and primarily involved allegations that Multiplex had breached its continuous disclosure obligations and engaged in misleading and deceptive conduct in its announcements regarding the Wembley stadium project in the period August 2004 to May 2005.

Although proceedings had been set down for trial in October 2010, the parties reached a negotiated settlement, on a no-admissions basis, which was approved by the Federal Court in July 2010. 

AWB

A settlement between the class action applicants and AWB of $39.5m was approved by the Federal Court on 27 April 2010.  The settlement related to the action commenced in April 2007, in which the applicants alleged that AWB breached its continuous disclosure obligations and engaged in misleading or deceptive conduct in respect of its failure to inform the market about the nature of its dealings with Iraq and its failure to disclose its dealings to the Australian Government between 2002 and 2006.  The applicants were people who had bought shares in AWB during that period.

Merck

In March 2010, the Federal Court handed down its decision in a class action against the manufacturer of the pharmaceutical Vioxx and its Australian subsidiary.  The applicants alleged that the Merck companies knew or should have known of the risks of heart attacks in patients who used Vioxx prior to its 2004 product recall.  A representative action was brought by a patient who had suffered a heart attack while taking Vioxx.  Although several claims were rejected, Justice Jessup did find that the Australian subsidiary’s failure to warn the patient’s doctor and its inaccurate emphasis on the safety of the drug constituted misleading and deceptive conduct under section 52 of the TPA.  Merck has appealed the decision, and the appeal is set down for hearing in August 2011.

A detailed analysis of the case is here.

 

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The changing colours of the regulation of third party litigation funding in Australia - Chameleon Mining

Despite the growing number of funded proceedings in Australian commercial litigation there remains no formal regulatory framework applies to litigation funders.  The old law of champerty and maintenance was swept aside and nothing was put in place to fill the gap. Read more

Litigation funding in Hong Kong - where is it going?

Recent case law in Hong Kong has emphasised the need for a balance to be struck between the public policy considerations upon which the doctrines of champerty and maintenance were developed against other countervailing public policy considerations, principally the promotion of access to justice. Read more

Legal fees and class action settlements: a refresher and case study

On 1 July 2011, the Federal Court of Australia approved the settlement of two shareholder class actions brought against Oz Minerals Ltd by, and on behalf of, shareholders. Read more

Stepping out: update on pre-litigation requirements and the new Federal Court Rules

The last 12 months has seen a flurry of activity in relation to the procedural requirements of the conduct of class actions across jurisdictions. Read more