With the enactment of the Civil Procedure (Representative Proceedings) Bill 2021 on 1 September 2022, Western Australia will soon have a new class actions regime. The Bill will not commence immediately so that the WA Supreme Court has the opportunity to develop supporting practice directions and rules to ensure that class action proceedings are conducted fairly and efficiently.
The road to the new class actions regime
Class action reform has been under consideration in Western Australia for at least the last decade. In July 2011, the then Attorney General of Western Australia asked the Law Reform Commission of Western Australia to consider whether the principles, practices and procedures pertaining to representative proceedings being commenced in the courts of Western Australia required reform.
Until now, representative proceedings in Western Australia have been able to be conducted via Order 18 of the Rules of the Supreme Court 1971 (WA), but this regime is much less comprehensive than the Federal class action regime or those in New South Wales, Victoria, Queensland and Tasmania.
In June 2015, after an extensive consultation process, the Commission published its Final Report, "Representative Proceedings", which recommended a class actions regime in the WA Supreme Court modelled on the Federal class actions regime found in Part IVA of the Federal Court of Australia Act 1976 (Cth). The Commission determined that Order 18 was inadequate to facilitate large-scale class actions in Western Australian courts. Its recommendations reflected a concern to ensure that the Western Australian court system was meeting community expectations for access to justice.
The Western Australian Government first acted upon this recommendation in 2019 when it introduced a bill containing a class actions regime to the Western Australian Parliament. In proposing that Parliament effectively adopt legislation modelled on the Federal class actions regime, the Western Australian Government embraced comments from the Federal Court’s Justice Bernard Murphy that the federal regime had "proved flexible and adaptable" and that it "provides real, practical and broad-based access to justice". The bill passed the Legislative Assembly in September 2019 but remained with the Legislative Council until it was eventually prorogued by Parliament in December 2020. The Civil Procedure (Representative Proceedings) Bill 2021 is substantially similar.
How is the Western Australian regime different to those in other Australian jurisdictions?
While the Bill is modelled on the Federal regime, it differs in several key respects.
First, the Bill expressly permits representative plaintiffs bringing a class action against multiple defendants, irrespective of whether each named representative plaintiff has a claim against every defendant. The Federal regime does not have an equivalent provision and this has, historically, given rise to some uncertainty. The provision is intended to provide legislative clarity in respect of this issue.
Second, the Bill grants the Court specific powers, that do not appear in the Federal regime, to substitute the representative plaintiff in a class action with another group member where it is in the interests of justice to do so. The provision is intended to provide the Court with additional flexibility in circumstances where the lead plaintiff is not adequately representing the interests of group members who he or she represents.
Finally, the Bill also contains a review clause to facilitate assessment of the operation and effectiveness of the regime in five years' time. That review must be undertaken by the Attorney General, with a report to be laid before both Houses of Parliament not later than 12 months after the five year anniversary of the legislation coming into force.
Greenlighting litigation funding
Maintenance and champerty make it unlawful to financially support litigation which the funder does not have a direct interest in or is party to (including in order to receive a cut of the proceeds obtained from the litigation). Following another Final Report from the Commission, the Bill also abolishes the torts of maintenance and champerty in Western Australia.
This move effectively gives the green light for litigation funders to finance Western Australian proceedings and brings Western Australia in line with most other Australian States and Territories. The Western Australian Government cited this, and "the fact that litigation funding is now a modern reality and has the potential to improve access to justice when the costs to initiate an action are prohibitive" in support of the move.
Interestingly, Western Australia has not followed Victoria's lead in removing the prohibition on lawyers charging a contingency fee in class actions. A contingency fee is a method of billing for legal services through a percentage amount recovered in the litigation, and historically Australian lawyers have been prohibited from charging them. Victoria’s reforms allow a lead plaintiff to apply to the Court seeking that the legal costs be in the form of a contingency fee. It remains to be seen whether the WA Parliament would seek to introduce similar reform in the future, or as part of the five-year review of the new regime.
What class action risk will look like in Western Australia
After the WA Supreme Court has developed supporting practice directions and rules to ensure that proceedings are conducted fairly and efficiently, class actions will be available in the Court. We expect the class actions initiated in the WA Supreme Court, as opposed to in another jurisdiction, will have a strong nexus to Western Australia. These types of class actions would include, for example, mass tort or negligence actions relating to natural disasters or environmental events in Western Australia.
We hold this view for several reasons. First, when a plaintiff law firm or funder is considering where to commence their next class action that affects people across Australia, we think it is likely that they would be commenced in the Supreme Court of Victoria (given the contingency fee provisions which are favourable to plaintiff law firms), or the Federal Court of Australia (as the first Court to have a class actions regime, since 1992). Secondly, given the absence of a modern class action regime in Western Australia until now, there are a limited number of firms in Western Australia with class action experience, so any class action opportunities are more likely to be identified by Eastern State firms.