Class Actions: the not-so-final frontier

  1. The interplay between the Anshun principle and class actions has finally been examined in detail by the High Court, in Timbercorp Finance Pty Ltd (In Liquidation) v Collins and Tomes [2016] HCA 44.


  1. Timbercorp Finance loaned funds to investors to invest in managed investment schemes. The schemes failed. Investors commenced a class action against the scheme operator, directors and Timbercorp Finance. The class action defined certain claims. Those claims were unsuccessful. Following the conclusion of the class action, Timbercorp Finance commenced loan-recovery proceedings against investors. Individual investors raised various defences, which Timbercorp Finance asserted were precluded by the lead plaintiff’s failure to pursue them in the class action.
  2. That question was referred to Robson J, who ruled against Timbercorp Finance. His Honour’s decision was upheld by the Court of Appeal. Timbercorp Finance obtained special leave to appeal to the High Court.

Anshun estoppel

  1. Both judgments in the High Court (a plurality plus a separate judgment by Gordon J reaching the same conclusion) restated the orthodox position as to Anshun It arises where the matter relied upon in a second action is so relevant to the subject matter of an earlier action that it would have been unreasonable not to raise the issue in the first action.

First question – lead plaintiff a privy in interest of the class members?

  1. Timbercorp Finance’s first contention was that the lead plaintiff was the privy in interest of class members, and the class members were Anshun estopped from raising any defence that the lead plaintiff could have raised in the earlier class action.
  2. The plurality drew upon the statutory framework of the class action regime (Part 4A of the Supreme Court Act 1986 (Vic)) to conclude that the lead plaintiff was a privy in interest of the class members in relation to the pleaded common issues in the class action, but not in relation to the class members’ individual Thus, the lead plaintiff’s conduct was not determinative of the Anshun question.
  3. Moreover, since the defence pleaded by Collins was a defence common to all members of the Collins schemes, it seems the High Court considers that the lead plaintiff is not a privy of the class members even in respect of common questions that he or she elected not to plead.

Second question – class members’ conduct unreasonable?

  1. Given that the lead plaintiff was only a privy in interest of the class members in respect of the pleaded common questions in the earlier class action, the next question was whether it had nevertheless been unreasonable for them not to have pressed for their individual defences to be addressed in the class action.
  2. Again, all members of the Court held that it had not been unreasonable for class members to refrain from raising their individual issues in the earlier action, nor unreasonable for them to decline to opt out from the earlier action because of those individual issues. This conclusion followed both from the structure of the Part 4A-type proceeding, which focuses on the common questions, and from the way issues had actually been defined and addressed in the class action under the various case-management orders made by the trial judge (Judd J).

Third question – abuse of process?

  1. Finally, the High Court held that it was not an abuse of process for the investors to raise their individual defences in the later proceeding. The plurality emphasised that the trial judge had had power to manage the conduct of the proceeding. The trial judge had been aware of the individual claims and, the plurality inferred, he had determined that it was not necessary, for the management of the class action, to resolve those individual claims. The plurality noted that there was no reason to suppose that the class action would have been conducted any differently, had the borrowers raised their individual defences.


  1. Timbercorp emphasises the limits on the “estopping” effects of class actions.  Depending on the pleadings and case-management orders, class members can decide to remain as a member of the class, without restricting their ability to run either individual issues or, perhaps, common issues outside those pleaded in the class action.
  2. This has practical consequences. Future defendants might now seek to broaden the scope of common issues; press for wider use of sub-groups; or seek to include more individual issues at the initial trial of class actions.
  3. Certainly, parties seeking to resolve class actions will need to be mindful of the extent to which the lead plaintiff can bind members to releases and acknowledgements with effects beyond the pleaded common issues.
  4. It is likely that the ramifications of Timbercorp will soon be tested. Readers are referred to Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214 and, more recently, Pekell Delaire Holdings Pty Ltd v Bendigo and Adelaide Bank Limited [2016] VSC 570 for illustrations of the complexities that arise in the “managed investment scheme” class actions, as lenders now seek to enforce loan agreements against the former class members.
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