Make haste slowly: Federal Court emphasises need to articulate class action claims at the outset

The Federal Court has issued a rebuke of Maurice Blackburn’s hasty commencement of a consumer class action against Westpac. The judgment is a timely reminder, in a post-Financial Services Royal Commission climate, that the costs and burdens associated with class actions procedure should not be imposed on defendants until plaintiffs’ claims are properly articulated.

In reasons published on 25 March 2019 in the Tate v Westpac Banking Corporation proceeding, the Honourable Justice Perram declined to make a common fund order.[1] His Honour did so on the basis that the Tates had not yet articulated their claim.

In the Federal Court of Australia, there are two ways to commence proceedings:

1. By originating application accompanied by a ‘concise statement’; or
2. By originating application accompanied by statement of claim or affidavit.

In commercial and corporations matters, the Court encourages parties to use the more informal concise statement process.[2]

One perceived advantage of the concise statement process is that it quickly brings the dispute before a judge, which facilitates the early identification of the real issues in dispute. It also allows faster commencement of proceedings. In a highly competitive class action market, the attraction of using the concise statement process to quickly commence proceedings is readily apparent.

Perhaps unsurprisingly, the Class Actions Practice Note states that the concise statement process will ‘usually’ be inappropriate for use in class actions. Nonetheless, in Tate v Westpac Banking Corporation, the Applicants commenced proceedings by way of concise statement.

His Honour was less than impressed by this course, noting that: “In doing so, [the Applicants] have shirked the burden of articulating what their case is.”

His Honour observed that the procedural mechanisms for case managing class actions – which include making and communicating common fund orders, opt out notices and class closure orders – are all “very expensive and burdensome” and should not be imposed until class members properly articulate their claim in accordance with the Class Actions Practice Note.

Accordingly, his Honour ordered that the plaintiffs file a Statement of Claim and postponed the question of whether to make a common fund order and orders for discovery until after the plaintiffs had done so.

In a climate where firms are rushing to commence class actions, in part because of an attitude that the first to commence is the most likely to survive a beauty parade, Perram J’s comments are a welcome reminder that the ‘class action machinery’ should not be imposed on defendants lightly.

Prosecuting a class action takes time. Plaintiffs rush it at their own risk.

^{[1] Tate v Westpac Banking Corporation (Common Fund Orders) [2019] FCA 405.}

^{[2] See Practice Note C&C-1.}