Class action risk: interim update 2024

Filings dip, but outlook remains uncertain 5 min read

Class action filings in 2024 are on track to fall short of the recent record-setting years, although there is reason to remain cautious as promoters maintain an appetite to pursue a broad base of claims with emerging areas of risk.

In this interim report we provide a high-level overview of class action filings over the first half of the year and highlight several factors that are poised to shape the class action landscape moving forward.

A more detailed and holistic picture of class action trends and developments will be provided in our annual Class Action Risk report, which will be published in early 2025.

Filing rates decline

• There continues to be growth in the number of plaintiff firms operating in the Australian class action market, including breakaway firms from established local class action practices and the arrival of another foreign-based firm.
• The barriers to entry to commence a class action in Australia remain incredibly low—there remains a lack of regulation of both litigation funders and the ability for plaintiff lawyers to obtain contingency fees in class action proceedings filed in the Supreme Court of Victoria and, following a recent judgment, the Federal Court.

Consumer claims lead the pack

For several years, consumer claims have represented the most popular form of class action in Australia. This trend has continued in the first half of 2024 and there are no signs of it slowing down. Claims against automakers, which have comprised a large proportion of consumer class actions over recent years, remain very much in vogue, although there is a pending High Court judgment that will have a material impact on future class action risk for automakers.

This judgment, which is expected to be handed down later this year, will determine whether the assessment of damages for a reduction in value resulting from a defect in goods is to be assessed at the time of supply or having regard to any remediation that may have restored the value of the goods. If the Court determines that damages are to be assessed at the time of supply (with no regard to subsequent remediation) it may well fuel an increase in the scrutiny of these claims.

Recalibration of shareholder class action risk

Shareholder claims have long accounted for a substantial proportion of class action filings, however, through the first six months of the year no shareholder class actions have been filed. While far from suggesting that this signals a dissipation of shareholder class action risk, the absence of any filings for over six months indicates that class action promoters are recalibrating the risks and significant challenges associated with pursuing these claims following a string of recent losses. As things stand, there have now been five shareholder class actions that have proceeded to judgment and in none of those proceedings have the plaintiffs established liability and any loss or damage. Whether the lack of shareholder class action filings over the first half of the year is a temporary lull or an indication of a potential step-change in the risk environment for listed entities may start to become clearer over the balance of the year.

Cyber and data breach class actions

After looming large on the horizon for many years, data breach class actions arrived in 2023 in the wake of the Optus and Medibank data breach incidents. Over the first half of this year there have not been any further data breach class actions filed, however, there has been a significant uptick in regulatory activity as the focus on cyberwashing, data governance and data security intensifies. When the recent regulatory developments are coupled with the expected reform to introduce a direct right of action under the Privacy Act and a tort of privacy, all signs point to further growth in this emerging area of risk.

What does it all mean for class action risk?

It is too early to suggest that the reduction in filing rates observed over the first half of the year signals any change in the class action risk environment. While filing rates have declined, it's important to take a longer term view of trends and developments when assessing risk.

There are some early signs that the focus areas of class action promoters may be shifting from what were historically very popular forms of claims to new and emerging areas of risk. However, a clearer picture will emerge over time, including in the wake of several key judgments that are currently reserved, and with further potential law reform. We will provide our insights on these issues in our annual class action review, which will be published in early 2025.