The educational sector is predicted to be the next target of entrepreneurial class action lawyers in Australia.
Australian educational institutions have remained unscathed by the continuing growth of class action litigation, but that is set to change. A number of recent developments has increased the risk of educational institutions defending student class actions
HOW CAN A CLASS ACTION BEGIN?
Australia has one of the most plaintiff-friendly legislative regimes in the world. Claims can be brought in New South Wales, Victoria and the Federal Court of Australia. Queensland will follow soon
. There are 94 current class actions in Australia with at least a further 70 under investigation by numerous plaintiff law firms.
Class actions are said to enable access to justice and impecuniosity is no barrier. A class action can be brought in Australia when an individual asserts they have a claim on behalf of seven or more persons, arising out of the same or similar related circumstances that give rise to a substantial common issue of law or fact. Usually cost orders can only be made against the named applicant or plaintiff. Third-party litigation funders are increasingly funding ongoing litigation costs and indemnifying class action plaintiffs for adverse cost order protection in return for a percentage of any settlement or judgment sum.
These factors allow a single student to provide instructions to an entrepreneurial plaintiff law firm to commence a class action against an Australian educational institution.
Australian plaintiff lawyers monitor and follow international class action trends, particularly from the United States and Canada. For example, actions for defective hip implant devices were commenced against DePuy and Johnson & Johnson in Australia following similar claims being made against those companies overseas.
In June this year the Ontario Superior Court approved a CAD$2.73 million settlement reached between former students and George Brown College following eight years of litigation. The proceedings arose out of alleged misrepresentations made by the College in the 2007–08 and 2008–09 course calendars about the benefits of its International Business Management Program. The College allegedly falsely stated that students would obtain three industry designations in addition to a graduate certificate upon graduation. The settlement represents a payment of a maximum of CAD$16,427 for domestic students and CAD$22,484 for international students for the costs of undertaking additional courses to meet industry requirements.
A further claim highlights the risk of promoting distance learning programs to international students. In August last year a Canadian class action seeking damages in excess of CAD$50 million was brought against the Niagara College of Applied Arts and Technology. The claim alleges that misleading statements were made about the ability of international students to qualify for three-year work permits on completion of a largely online general arts and science diploma transfer program. The students subsequently discovered the course did not meet Canadian work permit requirements because the online course was classified as a distance learning program. The Court will determine whether the proceedings can continue as a class action in January 2017.
Developments closer to home also point to the educational sector being the next target of class actions in Australia.
Earlier this year a class action was commenced against the Royal Australian Navy in the Supreme Court of NSW. The claim for breach of contract and negligent misrepresentation on behalf of over 200 sailors relates to the alleged failure of sailors to achieve a Certificate IV in Engineering during service in the Navy. Negligent misrepresentation is a common cause of action in the international claims noted above.
An individual claim has recently been brought against the University of Sydney alleging misleading or deceptive conduct after its announcement to close the Rozelle campus of its Sydney College of the Arts. Although the individual claim has been brought in the NSW Civil and Administrative Tribunal, media reports have indicated that as many as 650 students could ultimately join the action. There is a real risk that these claims could be consolidated as a class action in the Supreme Court of NSW because of the low threshold requirements to begin proceedings.
HDY has expertise in defending complex class actions and continues to monitor Australian and international class action developments.