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There has been some recent publicity regarding potential class action against the company FMC in relation to its herbicide ‘Overwatch’. Whilst many will be aware of the alleged issues with ‘Overwatch’, most people are less familiar with what is involved in a ‘class action’.

A class action involves legal proceedings being commenced on behalf of a group of unrelated people who have suffered some kind of loss or damage, where that loss or damage has been caused by the same person or company- the alleged ‘wrongdoer’. It differs from typical legal action in which the action is only brought on behalf of a single party against the wrongdoer.

There are, however, limits on bringing class actions. In 1992 the Federal Court of Australia Act was amended to incorporate provisions relating to class actions. Section 33C of the Act sets out the requirements for commencing a class action, namely that there must be claims by seven or more people against the same person/company, the claims must arise out of the same or related circumstances, and the claims must give rise to a substantial common issue of law or fact.

The range of matters for class actions has been broad, including people who have suffered as a result of contaminated food, tobacco claims, defective medical devices and investors.

With class actions becoming more common in Australia, the question arises as to whether someone who has suffered loss should go it alone or join in the group proceedings. As always, there will be pro’s and cons with each approach.

The benefit of taking proceedings personally is that you will be in control of the entire process, including all negotiations with the wrongdoer and whether you proceed all the way to a trial. The downside is that you will bear all the risk and all of the costs of the proceedings. In addition you will likely have to invest significant time.

This can be contrasted with class actions, where the risk and costs are shared amongst a broader group of people and you are less likely to need to devote the same amount of time to the process. The flip side of this is that you will not have the same level of control over the proceedings and any negotiations and settlement, and may have a result forced upon you.

The difficulty is that there is no clear cut answer as to whether you will end up in a better position from being involved in a class action or not. It will always depend on the particular circumstances - ultimately it will be an individual decision as to whether to go it alone as the lone wolf, or join in the group proceedings with the rest of the flock.

This article was published in The Stock Journal on 14 October, 2021