What Is a Class Action?

Why class actions exist

Class actions allow courts to resolve large numbers of individual claims efficiently and consistently. Without them, each affected person would need to fund and run their own lawsuit — often impractical when individual losses are modest but collective harm is substantial. They also deter corporate misconduct by making the cost of wrongdoing proportionate to its scale.

The three core requirements

Under Australian law, a representative proceeding can be commenced only if:

1. Seven or more persons have claims against the same person.
2. Those claims arise out of the same, similar, or related circumstances.
3. The claims give rise to at least one substantial common question of law or fact.

These requirements come from s33C of the Federal Court of Australia Act 1976. State Supreme Courts have mirrored provisions in their civil procedure legislation.

Who decides whether a class action proceeds

The court retains oversight throughout. It can decertify a class action if the common issue is not genuinely shared, order that subgroups be created, or approve — or reject — any proposed settlement. No settlement is binding on group members without court approval.

What a class action is not

A class action is not a government compensation scheme, an insurance claim, or a consumer complaint process. It is civil litigation — commenced in a court — and subject to all the procedural rules and uncertainties that entails. Registration of interest does not guarantee compensation or that a class action will proceed.