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Journal of Corporate Law Studies Volume 12, 2012 - Issue 1
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Original Articles

Collective Forms of Consumer Redress: Financial Ombudsman Service Case Study

Vicki Waye Professor of Law, Law School, University of South Australia.
&
Vince Morabito Professor, Department of Business Law and Taxation, Monash University.
Pages 1-31 | Published online: 07 May 2015

  • Australia's Access to Justice Taskforce, A Strategic Framework for Access to Justice in the Federal Civil System (2009); Commission of the European Communities, “Green Paper on Collective Consumer Redress”, COM(2008) 794.
  • TL Russell, “Exporting Class Actions to the European Union” (2010) 28 Boston University International Law Journal 141; C Hodges, “From Class Actions to Collective Redress: A Revolution in Approach to Compensation” (2009) 28 Civil Justice Quarterly 41; R Mulheron, “The Case for an Opt-Out Class Action for European Member States: A Legal and Empirical Analysis” (2009) 15 Columbia Journal of European Law 409.
  • Opt out representative proceedings are available pursuant to Federal Court of Australia Act 1976 (Cth), Part IVA; Supreme Court Act 1986 (Vic), Part 4A; and Civil Procedure Act 2005 (NSW), Part 10.
  • Hodges, supra n 2; S Clark and C Harris, “The Push to Reform Class Action Procedure in Australia: Evolution or Revolution?” (2008) 32 Melbourne University Law Review 775.
  • JC Coffee Jr, “Litigation Governance: Taking Accountability Seriously” (2009) 110 Columbia Law Review 288.
  • S Moran, “Class Actions: Class Acts or Bounty Hunts?” The Australian, 20 February, 2010.
  • “A Strategic Framework for Access to Justice in the Federal Civil System”, Recommendation 8.11.
  • “Green Paper on Consumer Collective Redress 2008”, [39–42]; Commission of the European Communities, “Follow-up to the Green Paper on Consumer Collective Redress” (2009).
  • T Eisenberg, GP Miller and E Sherwin, “Arbitration's Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Nonconsumer Contracts” (2008) 41 University of Michigan Journal of Law Reform 871, 884, stating that 60% of examined consumer contracts deemed the arbitration clause void if collective arbitration was permitted and also finding that 80% of examined consumer contracts waived rights to initiate class actions.
  • S McGill, “Consumer Arbitration Clause Enforcement: A Balanced Legislative Response” (2010) 47 American Business Law Journal 361, 400.
  • OECD, “OECD Recommendation on Consumer Dispute Resolution and Redress” (2007), IIB, available at http://www.oecd.org/document/4/0,3746,en_2649_34267_38960053_1_1_1_1,00.html (accessed on 6 March 2010).
  • However, for general commentary upon consumer redress schemes and proposals for reform in the UK see J Fisher and J Black, “Law and Regulation for global financial markets: enforcing the new regime—incentive or deterrence?” (2010) 4(4) Law & Financial Markets Review 346.
  • Eg I Ayres and J Braithwaite, Responsive Regulation: Transcending the Regulation Debate (Oxford University Press, 1992), ch 4; R Baldwin and M Cave, Understanding Regulation: Theory, Strategy, and Practice (Oxford University Press, 1999), 40–41, 133ff; P Verbruggen, “Does Co-regulation Strengthen EU Legitimacy?” (2009) 15(4) European Law Journal 425; EJ Balleisen and M Eisner, “The Promise and Pitfalls of Co-regulation: How Governments Can Draw on Private Governance for Public Purpose” in D Moss and J Cisternino (eds), New Perspectives on Regulation (Cambridge, MA, The Tobin Project, 2009).
  • For further information about collective ADR schemes operating in Europe please refer to European Commission—DG SANCO, “Study on the use of Alternative Dispute Resolution in the European Union” (2009) available at http://ec.europa.eu/consumers/redress_cons/collective_redress_en.htm#Studies, 49–50.
  • Corporations Act 2001 (Cth), s 761G. In Australia there are almost 5,000 holders of a financial services license. Around 3700 are licensed to provide financial services to retail clients: Australia, Review of Compensation Arrangements for Consumers of Financial Services (2011), [1.12, 1.14].
  • Corporations Act 2001 (Cth), ss 912A (1) (g), 912A (2) and 1017G; National Consumer Credit Protection Act 2009 (Cth), s 47.
  • ASIC is the major regulator of corporate entities and the operations of the financial services market. The Australian Prudential Regulation Authority regulates prudential institutions such as banks and insurers with a view to maintaining minimum levels of financial soundness.
  • Above n 15.
  • ASIC, “Regulatory Guide 139: Approval and Oversight of External Dispute Resolution Schemes” (2011) (RG 139).
  • Corporations Regulations 2001 (Cth), regs 7.6.02(3) and 7.9.77(3); National Consumer Credit Regulations 2010 (Cth), reg 10 (3).
  • RG 139.
  • RG 139.81.
  • RG 139.108.
  • RG 139.111.
  • RG 139.114.
  • RG 139.119.
  • RG 139.133.
  • Australian Securities and Investments Commission Act 2001 (Cth), s 33.
  • RG 139.120.
  • See Financial Ombudsman Service, “Terms of Reference”, 1 January 2010, available at http://fos.org.au/centric/home_page/about_us/terms_of_reference_b.jsp (accessed on 6 March 2010) and ASIC announcement of approval (09–263AD), available at https://storm.asic.gov.au/asic/asic.nsf/byheadline/09-263AD+ASIC+grants+approval+to+the+Financial+Ombudsman+Service+Limited+for+its+new+single+terms+of+reference?openDocument (accessed on 6 March 2011).
  • OECD, Consumer Policy Toolkit (2010), ch 4, available at http://www.oecd.org/document/34/0,3746,en_2649_34267_44074466_1_1_1_1,00.html (accessed on 6 March 2011).
  • E Hüpkes, “Regulation, Self-regulation or Co-regulation?” (2009) 5 Journal of Business Law 427; P Eijlander, “Possibilities and Constraints in the Use of Self-regulation and Co-regulation in Legislative Policy: Experience in the Netherlands—Lessons to Be Learned for the EU?” (2005) 9 Electronic Journal of Comparative Law 1; N Gunningham, PN Grabosky and D Sinclair, Smart Regulation: Designing Environmental Policy (Oxford, Clarendon Press, 1998), 107–09.
  • O Lobel, “The Renew Deal; The Fall of Regulation and the Rise of Governance in Contemporary Legal Thought” (2004) 89 Minnesota Law Review 342; S Burris, M Kempa and C Shearing, “Changes in Governance: A Cross-Disciplinary Review of Current Scholarship” (2008) 41 Akron Law Review 1.
  • SA Omarova, “Rethinking the Future of Self-regulation in the Financial Industry” (2010) 35 Brookings Journal International Law 665, 672; C Scott, “Regulation in the Age of Governance: The Rise of the Post-regulatory State” in J Jordana and D Levi-Faur (eds), The Politics of Regulation: Institutions and Regulatory Reforms for the Age of Governance (Cheltenham, Edward Elgar, 2004), 150–54.
  • Financial Services and Markets Act 2000 (UK), s 228 (2).
  • See Ombudsman for Banking and Investment Services, “Terms of Reference”, available at http://www.obsi.ca/UI/AboutUs/TermsofReference.aspx.
  • Fisher and Black, supra n 12, 348.
  • Ibid.
  • This provision came into effect on 12 October 2010: SI 2010/2480.
  • Financial Services and Markets Act 2000 (UK), s 404(9).
  • Ibid, s 404(5)–(8).
  • Ibid, s 404B.
  • FSA Guidance Note 10, “Consumer Redress Schemes”, cl 3.1. The obligation to consult and undertake cost—benefit analysis is imposed by Legislative and Regulatory Reform Act 2006 (UK), s 21; Regulators' Compliance Code 2007, Arts 3.1, 4.1 and 4.4.
  • Established by Tribunals, Courts and Enforcement Act 2007 (UK), s 3.
  • Financial Services and Markets Act 2000 (UK), s 404D. The principles of judicial review are the same as those applicable in the High Court: Tribunals, Courts and Enforcement Act 2007 (UK), s 15.
  • UK Treasury, A New Approach to Financial Regulation: the Blueprint for Reform (June 2011). See further, E Ferran “The Break-up of the Financial Services Authority” (2011) 31(3) Oxford Journal of Legal Studies 455; Financial Services Bill 2010–2012, cl 5 and sch 3.
  • Ayres and Braithwaite, supra n 13, 35–39.
  • However, as the use of these powers is governed by ASIC's perception of the public interest, other factors, such as the severity of risk of harm, whether the breach has become publicised significantly in the media or the amount of costs associated with enforcement, may be taken into account. Consequently, the concept of escalating responses to regulatory non-compliance may not always be appropriate: R Baldwin and J Black, “Really Responsive Regulation” (2008) 71 Modern Law Review 59, 62–64.
  • Consent of claimholders is required: s 50(d). A constitutional challenge to this provision that was to be heard before the High Court of Australia was subsequently settled: KPMG (a firm) v Commonwealth [2011] HCATrans 9.
  • V Morabito, “Class Action Facts and Figures (First Report; An Empirical Study of Australia's Class Action Regimes)” (December 2009), 28, available at http://globalclassactions.stanford.edu/empirical.
  • Australian Securities and Investments Commission Act 2001 (Cth), s 12GNB.
  • ASIC, “MR09-37 Opes Prime: Proposed Settlement and ANZ Enforceable Undertaking” (6 March 2009).
  • Australian Securities and Investments Commission Act 2001 (Cth), ss 93AA–93A. See further RG 100.
  • M Nehme, “Justice to Outsiders Through Undertakings” (2009) 9(1) QUT Law and Justice Journal 85, 89–90. According to the study conducted by Nehme, of the 277 enforceable undertakings made between ASIC and those in breach between 1998 and 2007, 71 involved compensation for third parties (p 95).
  • Corporations Act 2001 (Cth), ss 1317H–1317HB.
  • SH Lim, “Do Litigation Funders Add Value to Corporate Governance in Australia?” (2011) 29 Company & Securities Law Journal 135, 153–55; J Mayanja, “Enhancing Private Enforcement of Australia's Corporate Continuous Disclosure Regime: Why Unshackling Litigation Funders Makes Eminent Sense” (2010) 25 Australian Journal of Corporate Law 48, 54–56; EC Burch, “Securities Class Actions as Pragmatic Ex Post Regulation” (2008–09) 43 Georgia Law Review 63, 70–77, arguing that optimal enforcement of securities regulation requires SEC action to be supplemented by privately initiated class proceedings.
  • G Gilligan, “Expecting Too Much? Enforcement Limitations in the Regulation of Financial Markets”, paper presented at the Australian National University Workshop on The Dynamics of Capital Market Governance: Evaluating the Conflicting and Conflating Roles of Compliance, Regulation, Ethics and Accountability, 14–15 March 2007.
  • Lim, supra n 56, 155; Mayanja, supra n 56, 68.
  • However, the view that securities class action litigation achieves its rationale of ensuring adequate compensation and deterrence is contentious. See LE Mitchell, “The ‘Innocent Shareholder:' an Essay on Compensation and Deterrence in Securities Class-Action Lawsuits” [2009] Wisconsin Law Review 243; JC Coffee Jr, “Reforming the Securities Class Action: An Essay on Deterrence and Its Implementation” (2006) 106 Columbia Law Review 1534. On the other hand, the US experience of low returns to shareholders from class proceedings is not necessarily replicated in Australia: see, eg V Morabito, “Revisiting Australia's First Shareholder Class Action” in KE Lindgren (ed), Investor Class Actions (Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2009), 38; B Murphy and A Watson, “Negotiations and Settlement—2010 Multiplex Debrief”, paper presented at the Shareholder Class Action Masterclass, Sydney, October 2010, para 1.2. See, however, M Jacobs, “Telstra Class Action Settled for Just $5m”, Australian Financial Review, 13 November 2007, 3; S Moran, “Telstra Settlement Doesn't Please All Investors”, The Australian, 5 December 2007, 33.
  • Corporations Act 2001 (Cth), ss 674 and 675.
  • B Butler, “ASIC Attacked on Multiplex Deal”, The Age Newspaper, 22 July 2010.
  • Two class actions have been initiated against Nufarm in Australia's Federal Court: see T Lee, “Legal Heavyweights Launch Two Class Actions against Nufarm” The Australian 18 January, 2011. Although Nufarm provided ASIC with an enforceable undertaking in relation to breach of continuous disclosure obligations, the undertaking did not include an obligation to compensate investors for loss. See http://www.asic.gov.au/asic/asic.nsf/byheadline/10-255AD+Nufarm+pays+penalty+and+offers+enforceable+undertaking?openDocument (accessed on 14 March 2011).
  • The action against Sigma Pharmaceuticals alleges misleading and deceptive conduct and breach of continuous disclosure obligations: VID 933/2010 commenced in the Federal Court of Australia, Victorian Registry.
  • The NAB action relates to failure to disclose exposure to toxic debt in collateralised debt obligations (CDOs); proceedings were issued in the Supreme Court of Victoria. See http://www.mauriceblackburn.com.au/areas-of-practice/class-actions/current-class-actions/nab%C2%A0--class-action.aspx (accessed on 14 March 2011)
  • Two actions, one filed by Maurice Blackburn and the other by Slater & Gordon, alleged that Oz Minerals failed to disclose the full extent of its debt and refinancing difficulties during the global financial crisis. These proceedings (NSD 1127 of 2009 and NSD 1433 of 2010) were commenced in the Federal Court of Australia, Sydney Registry. An ASIC investigation into the allegations of breach of Oz Mineral's continuous disclosure obligations terminated without further action. In May 2011 it was announced that both proceedings had been settled.
  • Brookfield Multiplex Limited v International Litigation Funding Partners Pte Ltd (No 3) (2009) 256 ALR 427.
  • C Bowen, “Address to Shareholder Action Conference” (10 May 2010), available at http://www.chrisbowen.net/media-centre/speeches.do?newsId=3132 (accessed on 14 March 2011).
  • This latter exemption was subsequently proven essential as a result of the New South Wales Court of Appeal decision in International Litigation Partners Pte Ltd v Chameleon Mining NL [2011] NSWCA 50, which characterised litigation funding as a financial product under Corporations Act 2001 (Cth), s 763A. As a result of that decision, unless exempted by ASIC class order or by regulation, all litigation funders operating in Australia are required to obtain an Australian Financial Services License from ASIC. Australia's biggest litigation funder, IMF (Australia) Ltd already holds an Australian Financial Services License (albeit on a different basis to the grounds determined in the New South Wales Court of Appeal decision) and other funders have already been granted exemptions from holding such licenses by ASIC.
  • Dorajay Pty Ltd v Aristocrat Leisure Ltd, filed in the Supreme Court of Victoria in November 2003 and transferred to the Federal Court in March 2004, was the first securities class proceeding underwritten by IMF (Australia) Ltd.
  • G Houston, S Starykh, A Dahl and S Anderson, “Trends in Australian Securities Class Actions I January 1993–31 December 2009” (Nera Economic Consulting, 2010), 3.
  • Clark and Harris, supra n 4, 777. The increase in securities class action filings brings Australian class action activity level with the amount of activity observed in Canada: Houston et al., supra n 70, 4.
  • See further National Consumer Credit Protection Act 2009 (Cth), ch 3; Australian Consumer Law, Part 2–3.
  • Australia, “Department of Treasury, Future of Financial Advice”, available at http://futureofadvice.treasury.gov.au/content/Content.aspx?doc=home.htm (accessed on 18 June 2011).
  • The action against the Australia and New Zealand Banking Group Ltd and other banks alleges that the exception fees charged to consumers for late repayment of credit card debt or where they exceed their credit limit constitute an unlawful penalty. The action VID 811 of 2010 was commenced in the Federal Court of Australia, Victorian Registry.
  • Proceedings have been initiated against Bell Potter, a client stockbroking and financial advisory firm, alleging misleading and deceptive conduct in relation to the promotion of investments representative plaintiffs allege were grossly overvalued. Available at http://www.slatergordon.com.au/media/news-media-releases/Investors-begin-legal-fight-against-stockbroker-Bell-Potter (accessed on 14 March 2011).
  • Corporations Act 2001 (Cth), s 912B.
  • Corporations Regulations 2001 (Cth), 7.6.02AA.
  • Australia, supra n 15, ch 5. It is envisaged that the statutory compensation scheme will be a fund of last resort and would operate in addition to current compensation arrangements. It would be available where the relevant licensee was unable to meet claims as a result of insolvency, bankruptcy or inability to be contacted.
  • S Dluzniak, “Litigation Funding in Australia—An Overview” (2009) 61(10) Keeping Good Companies 625, note 3. Australian litigation financing firms include: IMF (Australia) Ltd, Hillcrest Litigation Services, Litigation Lending Services, Quantum Litigation Funding, LCM Litigation Fund and Australian Litigation Funders Pty Ltd. International funders in Australia include: International Litigation Funding Partners Pty Ltd, the Commonwealth Legal Fund LLC and Comprehensive Legal Funding LLC.
  • V Morabito, “Litigation Funders, Competing Class Actions, Opt Out Rates, Victorian Class Actions and Class Representatives (Second Report; An Empirical Study of Australia's Class Action Regimes)” (September 2010), available at http://globalclassactions.stanford.edu/empirical (accessed on 18 March 2011), 26.
  • V Waye and V Morabito, “The Dawning of the Age of the Litigation Entrepreneur” (2009) 28 Civil Justice Quarterly 389, 425.
  • Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; (2007) 244 ALR 600. Open and closed classes ought also to be available on the same basis in Victoria, which has analogous representative proceeding provisions. They are expressly authorised by the NSW regime: see Civil Procedure Act 2005 (NSW), s 166(2).
  • V Morabito, “Class Actions Instituted only for the Benefit of the Clients of the Class Representative's Solicitors” (2007) 29 Sydney Law Review 5, 12; P Spender, “After Fostif: Lingering Uncertainties and Controversies about Litigation Funding” (2008) 18 Journal of Judicial Administration 101, 111–13.
  • Morabito, supra n 80, 39.
  • R Mulheron and P Cashman, “Third Party Funding: A Changing Landscape” (2008) 27 Civil Justice Quarterly 312, 317.
  • R Guylas, “Analysis Casts Doubt on Success of Class Actions”, The Australian, 5 July 2010—commenting in part that high claimed losses in the initial stages of proceedings attract media attention and thus further participation in the class.
  • Legally, initiating proceedings first in time guarantees no monopoly to represent potential class members: Kirby v Centro Properties Limited [2008] FCA 1505.
  • Morabito, supra n 80, 22–23. Since March 2009, parallel proceedings have been initiated against Nufarm (see supra n 60), against Oz Minerals, against the Bendigo and Adelaide Bank and Great Southern, and against DePuy International Ltd. The latter actions initiated by Maurice Blackburn and by Shine Lawyers in 2011 involve claims for faulty hip implants.
  • The Act came into force on 1 August 2011.
  • Civil Dispute Resolution Act 2011(Cth), s 6.
  • Ibid, s 4.
  • Ibid, s 12.
  • Ibid, s 11.
  • CM 17—Representative Proceedings Commenced under Part IVA of the Federal Court of Australia Act 1976, cl 3.4 provides: “At the initial case management conference the parties will be asked to outline the issues and facts that appear to be in dispute. Usually, the parties will also be asked to indicate whether the matter should be referred for alternative dispute resolution and, if so, a timetable within which the alternative dispute resolution might proceed.”
  • Explanatory Memorandum, Civil Dispute Resolution Bill No 2 of 2010 (Cth), [12].
  • Civil Procedure Act 2005 (NSW), s 18E.
  • D Spencer and M Brogan, Mediation Law and Practice (Melbourne, Cambridge University Press, 2006), 30.
  • P Condliffe, “Practice What You Preach: Using Restorative Justice as an Alternative to Clergy Abuse” (2009) 11(6) ADR Bulletin Art 5.
  • Many consumer organisations are simply not geared to managing thousands of claims: D Fairgrieve and G Howells, “Collective Redress Procedures—European Debates” (2009) 58 International and Comparative Law Quarterly 379, 408; O Diyagi-Epstein, “Representation of Consumer Interest by Consumer Associations—Salvation for the Masses?” (2007) 3(2) Competition Law Review 209, 228.
  • Although collective ADR is thought to be far simpler, cheaper and more expeditious than representative proceedings, collective ADR still demands considerable resources for dealing with voluminous documentation, to formulate claims, to engage competent representation, etc.
  • Each Australian State has enacted a Commercial Arbitration Act which provides for the final determination of commercial disputes. See, eg Commercial Arbitration Act 2010 (NSW), s 1C; Commercial Arbitration Act 1984 (Vic), s 28.
  • L Nottage, “Consumer ADR and the Proposed Consumer Law in Australia: Room for Improvement” (2010) 9(2) QUT Law and Justice Journal 111, 134.
  • UK Department of Business, Innovation and Skills, “Empowering and Protecting Consumers” (June 2011), ch 4.
  • UK Treasury, supra n 46, 1.44.
  • G Howells and HW Micklitz, “Guidelines for Consumer Organisations and Collective Redress” (Consumer Law Enforcement Forum Project, 2009), 14 citing case studies where opt in collective redress procedures led to very few consumers (less than 1% in some cases) receiving compensation. These measures were contrasted with action by the Consumer Complaints Board in Sweden in relation to mobile phone charges which led to all private consumers receiving compensation.
  • These problems have led to arguments in favour of Australia adopting a cy pres remedy in class proceedings: RP Mulheron, The Class Action in Common Law Legal Systems: A Comparative Perspective (Portland, Hart Publishing, 2004), 427–30; V Morabito, “A Critique of the Victorian Law Reform Commission's Class Action Reform Strategy” (2009) 32 University of New South Wales Law Journal 1055, 1064–69.
  • Stolt-Nielsen SA v Animalfeeds Int'l Corp 130 S Ct 1758 (2010). According to the Court, because class arbitration was fundamentally different to a single arbitration, in the absence of a clause which expressly envisaged class arbitration or a body of law which mandated or provided for class arbitration as a default rule where no class arbitration clause existed, if a party opposed class arbitration it could not be compelled.
  • Above n 9. In AT & T Mobility LLC v Concepcion 131 S Ct 1740 (2011) the US Supreme Court determined that such clauses were not per se unconscionable and ought generally to be upheld. Interestingly, other jurisdictions have not been so coy in embracing class wide arbitration in securities disputes. The German Institute of Arbitration has developed a collective arbitration pro-forma for insertion into corporate constitutions to ensure shareholder assent to such proceedings: DIS—Supplementary Rules for Corporate Law Disputes—09, available at http://aryme.com/docs/adr/2-2-2274/arbitraje-alemania-2009-germany-dis-corporate-arbitrationrules-en.pdf (accessed on 21 March 2011).
  • According to the majority of the US Supreme Court in AT & T LLC v Concepcion 131 S Ct 1740 (2011), 1751, “the switch from bilateral to class arbitration sacrifices the principal advantage of arbitration—its informality—an makes the process slower, more costly, and more likely to generate procedural morass than final judgment”. See further JR Sternlight, “As Mandatory Binding Arbitration Meets the Class Action, Will the Class Action Survive?” (2000) 42 William & Mary Law Review 5, 110–14; B Hanotiau, Complex Arbitrations: Multiparty, Multicontract, Multi-Issue and Class Actions (Kluwer Law International, 2006), 275–76.
  • Collective Settlement of Mass Claims Act 2005 (Wet collectieve afwikkeling massaschade). See further I Tzankova, “Class Actions in the Netherlands” (Global Class Actions Exchange, 2007–08), available at http://globalclassactions.stanford.edu/taxonomy/term/65 (accessed on 23 March 2011).
  • Available at http://www.fos.org.au/centric/home_page/about_us/terms_of_reference_b.jsp (accessed on 22 March 2011).
  • As well as the Chief Ombudsman, there are three other specialised ombudsmen at the FOS.
  • Interview with Sally Davis, Chief Compliance Officer FOS, dated 29 November 2010 (notes on file with the authors).
  • Ibid.
  • More generally on collaborative problem solving approaches to regulation see E Christie, Finding Solutions for Environmental Conflicts: Power and Negotiation (Cheltenham, Edward Elgar, 2008), ch 10; S Sturm, “Second Generation Employment Discrimination: A Structural Approach” (2001) 101 Columbia Law Review 458, 475–79.
  • See C Ford, “New Governance in the Teeth of Human Frailty: Lessons from Financial Regulation” [2010] Wisconsin Law Review 441, 446, contending that regulators' limited knowability is a justification for a “bottom-up” participatory, regulatory process.
  • J Carmichael and M Polmerano, The Development and Regulation of Non-Bank Financial Institutions (Washington, World Bank, 2002), 67.
  • Interview with Sally Davis, supra n 113.
  • WH Simon, “Solving Problems vs Claiming Rights: The Pragmatist Challenge to Legal Liberalism” (2004) 46 William & Mary Law Review 127, 170–73.
  • Eg AJ Cohen, “Governance Legalism: Hayek and Sabel on Reasons and Rules, Organization and Law” [2010] Wisconsin Law Review 357, 362–63; Simon, supra n 119, 187; O Lobel, “The Renew Deal: The Fall of Regulation and the Rise of Governance in Contemporary Legal Thought” (2004) 89 Minnesota Law Review 342, 365.
  • See further JM Solomon, “Law and Governance in the 21st Regulatory State” (2008) 96 Texas Law Review 819, 823–26. The author outlines a number of studies where adaptability of industry-based regulation has improved levels of compliance and transformed practice.
  • Financial Ombudsman Service Circular No 5, Systemic Issues (March 2011) available at http://fos.org.au/centric/the_circular_5_home/systemic_issues_serious_misconduct_update.jsp? (accessed 6 April 2011).
  • Ibid.
  • D Hensler et al., Class Action Dilemmas: Pursuing Public Goals for Private Gain (Santa Monica, RAND Institute for Civil Justice, 1999), 207. For a recent discussion of the major components or categories of litigation costs, see New South Wales Law Reform Commission, “Security for Costs and Associated Costs Orders”, Consultation Paper 13 (May 2011), paras 1.17–1.22.
  • This similarity extends to the very limited data, which is available in both countries, regarding the costs incurred by class action defendants. See, however, B Murphy, “Current Trends and Issues in Australian Class Actions”, paper presented at the International Class Actions Conference, Melbourne, December 2005, 28 ($30 million); P Dawson Nominees Pty Ltd v Multiplex Limited [2007] FCA 1061, para 28 (per Finkelstein J) ($6.4 million); “Patrick Settles Waterfront Class Action for $8 million”, Australian Associated Press Financial News Wire, 20 March 2002 ($2.4 million); L Lamont, “Victims Get Slim Pickings as Lawyers Take $2m”, Sydney Morning Herald, 10 November 2004, 3 ($2 million).
  • See Bray v F Hoffmann-La Roche Ltd (2003) 200 ALR 607, 660 (per Finkelstein J).
  • See generally Morabito, supra n 59, 47–50; Murphy and Watson, supra n 59, para 10.6; B Slade, “The AWB Shareholder Class Action: Dealing with Uncertainties”, paper presented at the Shareholder Class Action Masterclass, Sydney, October 2010, 2; D Hope and S Meade, “Update on Class Actions in Australia”, paper presented at the ACLA National Conference 2010, Sydney, 11 November 2010, 8–9.
  • See generally B Dellavedova, V Morabito and B Sweeney, “Australia” in AA Foer and JW Cuneo (eds), The International Handbook on Private Enforcement of Competition Law (Cheltenham, Edward Elgar, 2010), 485, 493.
  • The average duration of the three cartel Part IVA proceedings that have been resolved to date has been 1,588 days. Securities class actions that were allowed to proceed as class actions have usually lasted more than 3 years. One securities class action lasted more than 10 years: see Milfull v Terranora Lakes Country Club Limited (In Liquidation) [2004] FCA 1637, paras 1 and 17 (per Kiefel J).
  • Part IVA, s 33X.
  • In a food poisoning case (NSD 995 of 1999), for instance, the Federal Court ordered the publication of the opt out notice in the following Australian newspapers: (i) The Australian; (ii) Sydney Morning Herald; (iii) Daily Telegraph; (iv) The Age; (v) Herald Sun; (vi) The Canberra Times; (vii) The Advertiser; (viii) The West Australian; (ix) The Northern Territory News; (x) The Mercury; (xi) The Courier Mail; and (xii) The Cairns Post.
  • Affidavit filed in the Rod Investments (Vic) Pty Ltd v Clark class action brought in the Supreme Court of Victoria. See also Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2001] VSC 284, para 29 (per Gillard J), where it was revealed that the costs of complying with the order made in the so-called Longford class action “were somewhere in the vicinity of $150,000”. In this Part IVA proceeding compensation was sought with respect to financial loss caused by the interruption to the supply of gas in Victoria in September and October 1998 following the explosion at the Longford gas facility on 25 September 1998. Justice Merkel of the Federal Court ordered that notice of the proceeding and of the opt out right be given by placing newspaper advertisements in the following manner: (i) a full-page advertisement containing the notice in the Herald Sun and The Age (two Melbourne newspapers); and (ii) a quarter-page advertisement containing the notice in the Herald Sun and The Age, eight daily regional newspapers and several foreign language newspapers.
  • Hensler et al., supra n 124.
  • Morabito, supra n 59, 57.
  • This Part IVA proceeding was brought on behalf of Chinese students with respect to the Federal Government's rejection of their applications for refugee status. For more details on this case, see R Tang, “Chinese Students Take Class Action”, Sydney Morning Herald, 20 November 1993, 6.
  • Usually contributions are received from all class members only where inclusion in the represented group is dependent on making such contributions.
  • See J Caruana and V Morabito, “Australian Unions—The Unknown Class Action Protagonists” (2011) 30 Civil Justice Quarterly 381, where it is revealed that approximately 60% of all the Part IVA proceedings filed in the first 17 years of the operation of Part IVA on behalf of aggrieved employees were funded by their unions.
  • Examples of Part IVA applicants who received funding from legal aid commissions are furnished by the two Part IVA proceedings that were filed in 1994 with respect to the involvement of thousands of New South Wales residents in the HomeFund housing loan scheme, “a scheme created by the New South Wales Government to provide home finance for persons who would not satisfy the criteria of ordinary lending institutions”: Woodlands v Permanent Trustee Co Ltd (1995) 58 FCR 139, 142 (per Wilcox J).
  • supra n 49.
  • It is fascinating to note that the persons and entities that have made financial contributions towards Part IVA proceedings have included members of the Catholic Church and the Anti- Cancer Council.
  • See generally V Morabito, “Contingency Fee Agreements with Represented Persons in Class Actions—An Undesirable Australian Phenomenon” (2005) 34 Common Law World Review 201. Occasionally, the barristers briefed by the class representative's solicitors have also acted on a speculative basis: information provided to the second-named author by Justice Bernard Murphy of the Federal Court and John Madden of Maddens Lawyers.
  • Morabito, supra n 80, 37.
  • See generally M Legg, “Necessity is the Mother of Invention—The Adoption of Third Party Litigation Funding and the Closed Class in Australian Class Actions” (2009) 38 Common Law World Review 245.
  • It is interesting to note that, in its 1988 report on grouped proceedings, the Australian Law Reform Commission expressed a preference for “private financing of grouped proceedings by, for example, consumer organisations or environmental groups in every case, as long as the agreement to maintain the action was not made in consideration of a share in the proceeds or subject matter of the action” (Australian Law Reform Commission, “Grouped Proceedings in the Federal Court”, Report no 46 (1988), para 318).
  • For more details see V Morabito and V Waye, “Reining in Litigation Entrepreneurs: A New Zealand Proposal” [2011] New Zealand Law Review 323.
  • Morabito, supra n 80, 41.
  • Part IVA, s 33V.
  • This measure may be said to be conservative to the extent that on a number of occasions the class representative's solicitors have agreed to receive payments, pursuant to settlement agreements executed with Part IVA respondents, that were inferior to what they were legally entitled to receive: see, eg King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2003] FCA 980, para 15 (per Moore J); Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) [2006] FCA 1388, para 98 (per Jessup J); C Merritt, “Firm that Walked Away from $2.7m”, The Australian, 3 November 2006, 24.
  • Data provided to the second-named author on the basis that the Part IVA proceeding in question would not be disclosed.
  • Far more information is provided in comparative tables summarising individual disputes data. See the Financial Ombudsman Service's comparative tables, available at http://www.fos.org.au/comparativetables/2009-2010/ (accessed 7 April 2011).
  • A good outline of the practice of collaborative problem solving in governance and regulation in the US can be found in D Ne Jaime, “When New Governance Fails” (2009) 70 Ohio State Law Journal 323, 331–37.
  • Financial Ombudsman Service, independent reviews, available at http://www.fos.org.au/centric/home_page/about_us/independent_reviews.jsp (accessed 7 April 2011).
  • Australia's Access to Justice Taskforce, supra n 1, 88.
  • In addition to consulting with the ombudsman, the FSA plans to consult all stakeholders including consumers prior to engaging in a formal consultation: FSA, supra n 43, cl 4.1.
  • Eg Australia, supra n 15, [2.36] documents a case where, following an investigation into the provision of inappropriate financial advice, ASIC was able to secure the agreement of a financial adviser to identify the retail clients affected, assess liability and compensate accordingly.
  • Fisher and Black, supra n 12, 350.
  • Ibid.
  • FSA, supra n 43, cl 3.1.
  • Ibid, 6.4.
  • Financial Ombudsman Service, supra n 152.
  • See further Australia, Department of Treasury Issues Paper, Consumer Voices: Sustaining Advocacy and Research in Australia's New Consumer Policy Framework (2009); Australia Productivity Commission, Review of Australia's Consumer Policy Framework (2008), Recommendation 11.3.
  • supra n 74.
  • See further Australian Securities and Investments Commission Act 2001 (Cth), ss 12CA—CC.
  • Citicorp Australia Ltd v Hendry (1985) 4 NSWLR 1; AMEVUDC Finance Ltd v Austin (1986) 162 CLR 170; Esanda Finance Corporation Ltd v Plessnig (1989) 166 CLR 131.
  • Routine breach refers to cases where the interpretation and application of regulation is well established so as to permit wholesale bureaucratic settlement. See further S Issachroff and JF Witt, “The Inevitability of Aggregate Settlement: An Institutional Account of American Tort Law” (2004) 57 Vanderbilt Law Review 1569.
  • Actions taken by consumer organisations are more significant in jurisdictions where their funding base is largely underwritten by the State. Thus, in Germany, where the government provides substantial amounts of funding to private consumer organisations, they are far more active in obtaining collective consumer redress: Commission of the European Communities, supra n 8, 18.

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