By: Amanda Beattie, Zoe Jones and Nick Salagaras

At a glance

• The Supreme Court of Victoria has granted an application made by a defendant (Waller Legal) for a claim to no longer proceed as a group proceeding.
• The claim made by the lead plaintiff, Jane Jones (a pseudonym) alleged that Waller Legal breached its duty of care to clients who had allegedly suffered abuse by failing to adequately advise them in relation to claims.
• Justice Gorton found that there are common questions of fact in each group members’ claim, but that each claim will ultimately turn on what advice individual plaintiff’s allege they should have received from Waller Legal, with reference to the specific circumstances of the abuse that they had allegedly suffered.
• This decision is a rare example of the Court granting a declassing order and has the potential for plaintiffs to refocus their claims upon institutional defendants rather than pursuing group proceedings. It could also have broader ramifications in group proceedings, particularly those which relate to claims over a long period of time.

Claim

The plaintiffs alleged that Waller Legal had breached its duty of care to its clients by failing to adequately advise, or pursue claims for damages for loss of earning capacity as part of their individual historical abuse claims. The claim alleged that the defendant had an “invariable practise” of advising its group member clients to resolve their claims informally rather than commencing proceedings, and to seek a nominal sum for loss of earning capacity rather than making a formal claim for economic loss. The claim further alleged that the defendant misunderstood the legal principles applicable to an assessment of damages for economic loss.

Waller Legal denied the allegations, stating it had pursued claims for economic loss for many of its clients. For those it did not, those clients did not wish to make such a claim for a variety of reasons, including disclosure of income to tax authorities, the impact of such a claim upon their Centrelink benefits, or that a particular client did not have a viable cause of action with respect to economic loss.

Justice Gorton heard an interlocutory application filed by Waller Legal seeking the claim no longer proceed as a group proceeding. The plaintiffs submitted that common questions as to the defendant’s practises when giving advice could usefully be determined by a group proceeding, and a finding on those questions could then be relied upon by each group member in their own individual claims.

The defendant submitted that each group member’s claim was distinct and depended upon the advice given to each client, which was further complicated by the defendant having engaged approximately 29 different counsel to give advice to their clients. The defendant also highlighted problems associated with waiver of privilege and confidentiality in examining advice given to each of the group members.

Legislation

Section 33N of the Supreme Court Act 1986 (Vic) provides that the Court may, upon application of the defendant, order that a proceeding no longer continue as a class action if the court is satisfied that it is no longer in the interests of justice to do so.

In his decision, Gorton J affirmed that it is for a defendant to establish that it is in the interests of justice that the proceeding no longer continue as a group proceeding because of the existence of one or more of the matters set out in paragraphs (a) to (d) of Section 33N(1).

Decision

His Honour examined the claim made by the group members and the common questions of fact and law submitted by the lead plaintiff to be resolved by the group proceeding. His Honour found that, while there were common questions of fact and law in the group members’ claims, determining those questions would be a lengthy process, and would not ultimately assist to resolve their claims.

In relation to the question of fact as to Waller Legal’s alleged “invariable” advice practises, his Honour found that a court would be unlikely to draw such an inference without calling the vast majority of group members to give evidence about the advice they had received, which would be a drawn out, expensive process. Further, his Honour concluded that even if such a finding were made, each claim would depend upon an assessment of each individual’s particular circumstances, what advice they say they should have received, and what action they would have taken had they received that advice.

His Honour also noted the many changes to the legal landscape with respect to abuse claims during the period in which the group members had been represented by Waller Legal. These include the introduction of the National Redress Scheme, the enactment of the Legal Identity of Defendants (Organisational Child Abuse) Act 2018 (Vic), and the extension of the Limitation of Actions Act 1958 to allow a court to set aside a previous settlement or judgment if found just and reasonable to do so for claims resolved before 1 July 2018.

These factors combined led his Honour to conclude that the common questions of fact or law that may be determined in the lead plaintiff’s proceeding would not apply to all, or a sufficient number of, group members to make a group proceeding an efficient and effective means of dealing with their claims. That led to his Honour concluding that there was an “imbalance between common and individual issues” which made a termination under Section 33N appropriate in this case.

His Honour noted the defendant’s submission that not all group members had waived privilege to enable an examination of the legal advice they had received in respect of their claims. His Honour did not consider this to be a barrier to the claim proceeding as a group proceeding, finding that this could be overcome by appropriate safeguards.

Impacts

It is an interesting decision from the Supreme Court of Victoria, which has widely become the leading class actions jurisdiction in Australia.

We expect that this decision will give pause to plaintiffs considering a group proceeding where those group members’ causes of action span a significant period of time, as was the case with the group members in this proceeding. His Honour acknowledged that this decision has the effect of statute barring those claimants who would otherwise be out of time to commence their individual proceedings, and reducing any penalty interest than they would otherwise receive. This could see plaintiffs refocussing their efforts upon institutional defendants rather than pursuing group proceedings.

Further, the fact that a group proceeding may not be an effective procedure to resolve their claim may be helpful when considering the merits of whether a prior settlement may be set aside, pursuant to the Limitation of Actions Act 1958.

Whether this decision results in more defendants pursuing declassing applications remains to be seen. What is clear is that a declassing application will turn on the facts of each case, so there is only limited guidance that can be taken from it. That said, his Honour’s comments in relation to the length of time the claim spans and the difficulties that arise as a result, combined with the potential for claims against third parties (in this case, counsel), could apply in other proceedings and may become factors that defendants in other group proceedings consider more closely at the outset of matters.

Stay up to date on class actions

Complete the form below to subscribe to Wotton Kearney’s Class Actions updates.