Discussion Paper - Law Reform Commission of Western Australia

protects absent class members and the defendant against large vexatious litigations.
It also attempts to guarantee efficient and affordable justice by ensuring that court
resources are not wasted on unwarranted class actions. However, certification
procedures can also undermine the very principles they seek to uphold. Extensive
certification procedures can mean that much of the court’s time is taken up with
preliminary matters rather than the substantive issues or merits of a claim. In
addition, class action claimants may face substantial extra costs. The difficulty in
developing reform proposals lies in identifying viable alternatives. Even a regime
that does not formally require certification may experience the same limitations if
the courts become inundated with preliminary interlocutory hearings in class action
proceedings. In light of this, it may be preferable to develop a clear certification
procedure so that potential applicants can feel confident in the consistency of class
action justice.
Fourfold categorisation system for class actions under Rule 23(b)
5.103 As outlined above, class action claimants must elect an appropriate category of
class action under which their claim should be certified. The remedies the claimants
are seeking will usually govern this choice and dictate the certification requirements.
Other jurisdictions have not considered the categorisation system to be helpful and
have not adopted it. In particular, in its 1988 report the Australian Law Reform
Commission (ALRC) rejected the fourfold categorisation on the grounds that the
categories were overlapping and lacking a coherent conceptual basis. 213
Additional and overlapping certification criterion
5.104 Owing to the overlap between the class action categories, it is arguable that
the Rule 23(b)(3) certification requirements for superiority and predominance
should be common to all class actions. However, if uniform certification procedures
were to be developed, care must be taken to avoid repetition. As already stated, the
need for a typicality requirement under Rule 23(a) has been questioned given the
existence of the commonality and adequate representation requirements. In light of
this, if certification criterion were developed as part of Western Australian reform
proposals these requirements should avoid overlapping inquiries.
Risk of abuse of the class action mechanism
5.105 A combination of factors has made the Rule 23 class action regime susceptible
to abuse. First, parties to class action litigation are only responsible for their own
costs. Second, representative plaintiffs may be able to enter into contingency
fee agreements that require no payment unless an action succeeds. In effect this
may make class action litigation an attractive ‘no lose’ proposition for potential
claimants. However, access to justice principles makes it essential that a mechanism
be developed to mitigate the costs burden facing representative claimants. Putting
aside the motivations of class representatives, permitting court supervision of attorney
fee arrangements under Rule 23(h) may go some way to preventing opportunistic
lawyers from taking advantage of the class action mechanism. However, United States
court resources may still be unnecessarily expended in the preliminary procedures
required of all potential class actions. Western Australian reform proposals should
focus on developing mechanisms that balance the principles of affordable, efficient
justice with the needs of class representatives and their solicitors to avoid similar
abuse.
213. ALRC, Grouped Proceedings in the Federal Court, Report No 46 (1988) 194.
Chapter 5: Overseas Models 83