Commencement Requirements Relaxed For Australian Class Actions?

Key Points

To commence a class action in the Federal Court, the class action legislation provides that "7 or more persons" must "have claims against the same person". In class actions involving multiple respondents, a body of inconsistent Federal Court case law has emerged on the question of whether this requirement is met only when all class members have a claim against each of the respondents (the narrow view) or whether it is met simply where the class representative does (the wide view). In Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487, the Full Court proceeded on the basis that the narrow view was correct. In contrast, in Bray v Hoffman La-Roche Ltd (2003) 130 FCR 317, a Full Court majority preferred the wide view, suggesting that only the class representative (and not the class members) must have a claim against each respondent. Numerous Federal Court judgments since 2003 have split on the correct approach, following one line or the other. The latest word on the issue is Farrell J's judgement of 2 May 2014 in Gray v Cash Converters International Limited [2014] FCA 420. In that decision, Farrell J followed the Bray approach. Unfortunately, in light of the history of the inconsistent Full Court judgments, and the related inconsistent subsequent single judge judgments, Farrell J's judgment does not resolve the debate. In practical terms, resolution will require a definitive ruling from, ideally, a five-member bench of the Full Court of the Federal Court or the High Court or, as has occurred in NSW in respect of its class action procedure, legislation to put the issue beyond doubt. (The NSW legislation adopts the Bray approach). Background

Ms Gray commenced two class actions related to the provision of consumer credit by Cash Converters franchises through "personal loan" and "cash advance" contracts. The respondents are alleged to have engaged in unconscionable conduct in contravention of s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth), and the interest/fees charged in the credit contracts and cash advance contracts were in contravention of the Credit (Commonwealth Powers) Act 2010 (NSW), which caps the maximum annual interest rate on consumer credit contracts. In the personal loan proceedings, Ms Gray obtained personal loans from both Safrock Finance Corporation (Qld) Pty Ltd and Cash Converters Personal Finance Pty Ltd, but the members of the class in that proceeding obtained finance from one...